Buying property in the Caribbean without tears

Despite the current economic climate, investment in property remains one of the best ways to create wealth for yourself, your children and your grandchildren. So whether you’re looking for an investment property, a second/holiday home or a retirement home, the Caribbean remains a great place in which to invest in property.  But buying property in a part of the world that is synonymous with paradise is not without risks, especially for overseas residents.

Many of the pitfalls encountered by overseas residents buying property in the Caribbean could have been avoided.  In this article we will look at some of the important points to consider when buying property in the Caribbean.

Be sure about your reasons for buying a property in the Caribbean, as this will determine where to buy, what type of property to buy and price.  If you’re buying for investment purposes only, then you should choose an island that is popular with tourists.  It should also be within close proximity to amenities and facilities.  Owning a property in an isolated location with spectacular scenic views will make you the envy of friends and family, but it will not generate as much rental income as the property that is within walking distance to the nearest beach. If, on the other hand, you’re buying a second or retirement home in the Caribbean, then your location and property type can be more personal.  Older buyers of retirement homes should also consider number of floor levels and accessibility to amenities and facilities should they be unable to drive or get around as easily as in days gone by.

There are many types of property available for sale in the Caribbean.  These include parcels of land for residential or commercial development, apartments (aka condominiums), luxury villas with pools, and detached homes with sufficient land space for you to enjoy eating home-grown fruit and vegetables. The type of property you choose to buy will therefore depend on your reasons for doing so and budget.

You should know from the outset how you intend to finance your purchase.  This can be as a cash buyer or with the aid of a mortgage secured from a Caribbean lending institution.  You cannot obtain a mortgage secured against your property in the Caribbean from a UK lending institution.  If you’re getting a mortgage from a local lending institution, you should first seek pre-approval to ascertain how much you can borrow, repayment period and monthly payments.  Viewing properties before you know how much you can afford can lead to disappointment when you find that dream property, only to be told that you cannot secure funds to buy it. You will be required to provide documentary evidence when submitting an application for a mortgage from a Caribbean lending institution, just as you would if applying for a mortgage at home. The process for obtaining a mortgage from a Caribbean lending institution may vary from island to island, and from institution to institution.   Employing the services of a Caribbean mortgage broker will save you time, in addition to which, he/she will be more au fait with the best deals available from the individual lending institutions.  Always check first to ascertain whether or not a mortgage broker is ‘tied’ to a particular lending institution, as if they are, they are unlikely to recommend another lender, even it that lender is offering a better mortgage package.

Now that you know exactly where you want to buy, type of property to buy and how you will finance your purchase, the next step is to find it. This is when you will require the services of a reputable local realtor whose role will be to arrange appointments for viewings to take place when you visit the island in which you have decided to invest in property.  Being in the Caribbean for two weeks is not a long time, so it is advisable to take your own photos of the properties of interest to you, making notes about each as you view them.  You should also make notes about specific questions relating to the properties that you will be considering for possible purchase.  Your photos and notes can then be used to refresh your memory about the various properties that you viewed.

Having selected the property that you wish to buy in the Caribbean, you will need to make an offer to purchase.  Your offer to purchase is usually done via the agent with whom you viewed the subject property.  Some Caribbean islands require that you make your offer in writing, and where this is so, acceptance of your offer should also be in writing.  It should be noted that although you may have made your offer to purchase in writing, it is only when you sign the Agreement for Sale and pay over the requisite deposit monies to your attorney that you will be legally bound to proceed with the purchase.  Failure to do so will lead to you forfeiting the deposit.

Once your offer has been accepted you will need to employ professional services to deal with the various aspects of your purchase.  A well-prepared valuation report should provide information about the property you intend to buy, neighbourhood, nearby amenities and facilities, and current market value.  A survey report is extremely important when purchasing property in the Caribbean, as it will highlight such issues as encroachments affecting the property you wish to buy.  And last, but not least, you will require the services of an attorney to deal with the legal formalities on your behalf.

The conveyancing process for buying property in the Caribbean can take anything from three to six months to complete, depending on the pace at which your attorney and the attorney for the other side work, and whether or not there are any legal issues that need to be resolved before matters are finalised. When the time comes for signing legal documents, signatures need to be notarised if buyers live outside of the Caribbean.  Once all legal formalities have been concluded, the title to your property can either be sent to you by your attorney via courier service, or collected by you from your attorney when you next visit the Caribbean to either live or spend time in your newly acquired home in paradise.

Case Study

Mr A (buyer) was invited by Mr B (seller) to purchase one of six lots being sold by Mr B.  They agreed on a price and Mr A paid over the purchase monies to Mr B, who provided Mr A with a receipt for the funds.  Neither party used an attorney, so Mr A did not know that Mr B was selling the lots without sub-division approval having been obtained from the relevant government body.  Mr A’s land was therefore still part of a larger lot owned by Mr B, along with others who had also paid Mr B to purchase the other lots for sale.

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